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Wafer fab market set to grow

The worldwide wafer fab equipment market is beginning to rebound, according to Gartner Dataquest.

The worldwide wafer fab equipment market is beginning to rebound, according to Gartner Dataquest. The analyst house predicts that the sector will see a growth in spending from Q3 2001 to Q3 2002.

Global wafer fab equipment spending is expected to hit US$5.2 billion in the third quarter of 2002, a 5.3% increase from the same period last year. However, Gartner Dataquest is still predicting an overall decline in the year-end totals. Spending is projected to total US$18.9 billion, this year, a 20% drop from 2001’s total of US$23.7 billion.

"Those regions that cut little and late in 2001, such as some Japanese companies, continue to cut deep this year, while regions such as Asia/Pacific that cut early and deep last year are the first to increase this year," notes Klaus Rinnen, chief analyst and director of Gartner Dataquest's semiconductor manufacturing group.

Rinnen says that there has been some increase in spending, which has been mainly driven by foundry.

"Initial spending growth from foundries has been in filling out leading-edge fabs in the face of improving but continuing overcapacity," Rinnen explains. "But if demand does not materialize, spending can and will be cut rapidly."

New fab activity, however, remains sluggish this year. A lack of demand and overcapacity in the fabs is limiting the need for new equipment and focusing it on technology until late in the year.

"Technology buys for leading-edge devices have been the key drivers for equipment purchases in the first half of 2002. In 2003, we will begin to see the transition to investment into upgrading established capacity to investment into new capacity," Rinnen predicts.

2003 should therefore be a positive year for the industry given the fact that it will be significantly under-invested and that demand is expected to grow. Worldwide semiconductor capital spending is expected to hit US$47.3 billion in 2003, a 34% rise from 2002. Wafer fab equipment spending will total US$26.9 billion, a 42.1%.

"We expect 2003 to be a transition year in several aspects: the transition from foundry-driven to broad-driven spending recovery, the transition from technology buys to capacity buys, and the transition from investment into established to investment into new capacity. We believe 2003 will finally be the year we see the transition from spending contraction to expansion in the annual revenue outlook," Rinnen concludes.

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